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VECCMS (vitamin enhanced chocolate coated marshmallows) failed to gain distribution in most health food stores, but Paul was determined to pursue his dream of


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VECCMS (vitamin enhanced chocolate coated marshmallows) failed to gain distribution in most health food stores, but Paul was determined to pursue his dream of marketing a good-tasting snack food that would include minimum daily requirements of most vitamins and minerals. He sold them in 16oz resealable bags through independent grocery stores throughout the Mid-Atlantic. Paul's Selling prices to wholesalers of $1.00 a bag resulted in a contribution margin before advertising and promotion of 34%. Wholesalers sold to retailers and retailers to consumers, earning margins of 25% and 50% respectively. Sales are currently 1,200 bags per week. Paul is considering distributing 1 million free standing insert (FSI) coupons for $0.20 off the regular price and expects to pay $4 per thousand for artwork and distribution. Each coupon redeemed will cost an additional $0.03 in processing fees. What percentage lift would be required for Paul to break-even on the promotional allowance program where when retailers reduce prices by 10%, Paul will pay them $0.10 per bag sold at the reduced prices?

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